The global cannabidiol, recreational, and medical cannabis industry is valued at more than $35 billion.
In 2020 in the US alone, the revenue of Cannabis companies touched $20 billion. But during the same time the stock prices of Cannabis companies are trading at discounted levels. To put things in perspective, Canadian cannabis index has lost almost 50% of its value during this time.
WHY?
The major reasons for this are:
– Lack of institutional investment
– Limited funding and no stimulus to invest in the sector
-Uncertainty among investors regarding the US legislation about Marijuana and legal cannabis usage: FYI the use of recreational cannabis is now allowed in 18 states in America and has been legal since 2018 in Canada.
– The marijuana legislation has failed to gain support in the Senate.
The Way Forward
According to business intelligence reports, the industry is expected to grow exponentially and once the cannabis companies establish a code for ESG and corporate governance, and as institutional funds flow in, the stock price will factor in these aspects and continue its trajectory upwards.
Until then, the investors of cannabis and marijuana themed stocks need to hold the bag.
What do you think about the whole story? Tell us your thoughts in the comments.
